Officials say we are "closer to the end than the beginning" with Dodd Frank regulations

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Chris Harlow

Speaking in front of the US Senate banking committee today, officials have said that the Dodd-Frank regulations designed to prevent future financial crises will be more or less complete by the end of the year.

Mary Miller of the US Treasury said that “we are closer to the end than the beginning” and that we will see “significant progress this year”, while comptroller of the currency Thomas Curry said his office (OCC) had finished all of the rules it was supposed to do by itself.

However, senator Mike Crapo admitted that there is still “considerable work to be done” as we approach the third anniversary of Dodd-Frank. He added that, “encouragingly, there appears to be a building bipartisan consensus that some elements of Dodd-Frank may need to be fixed”.

This week, the Federal Reserve, Federal Deposit Insurance Corporation and OCC completed work on bank capital rules. They also proposed a tougher leverage requirement for eight of the country’s largest lenders and are awaiting feedback on this.

In a statement released before the hearing, Daniel Tarullo, member of the Board of Governors, said he expects this year to complete implementation of capital surcharge for systemically important banks, a liquidity rule, the Volcker rule (which would ban proprietary trading), and the Fed’s enhanced prudential requirements for systemically important firms (with the exception of single counterparty credit limits).

At the hearing, Tarullo said the major vulnerability of the financial system is related to short-term wholesale funding. He expects that the proposal due to come out later in the year will recommend banks must hold a minimum amount of long-term debt.